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Capital Flight
Tackling Tax Havens - Adressing Fiscal Deficits, Financing Development and Stabilizing Finance
Anna Gibson, Research Associate, Re-Define
The German government recently decided to purchase stolen data revealing tax avoiders hiding money in Swiss bank accounts. This is a risky move diplomatically, but, for Germany, the gains from tackling this tax flight appear to outweigh the risks. It is also illustrative of the proliferating efforts by individual governments and the international community to clamp down on tax flight: the loss of tax revenue due to cross border tax evasion or avoidance.
However, the recent spat between Switzerland and Germany is merely the tip of the iceberg; symptomatic of what is one the most serious systemic failures of our time: the lack of intergovernmental cooperation on cross-border financial matters.
In order to capture the true extent of this failure and seek sufficient and holistic remedies, the current discussion can be crystallised into three central arguments: the effect of tax havens on fiscal revenue, development finance, and the stability of the financial system.
